Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total costs
A)can be represented by the area P2 × Q2.
B)can be represented by the area P3 × Q2.
C)can be represented by the area (P3-P2) × Q3.
D)are zero.

Question

Figure 14-6
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-6. When market price is P3, a profit-maximizing firm's total costs
A)can be represented by the area P2 × Q2. 
B)can be represented by the area P3 × Q2. 
C)can be represented by the area (P3-P2) × Q3. 
D)are zero.

Quizplus · Accepted Answer

At P3, the profit-maximizing firm will produce where MR=MC, which occurs at output level Q2. The total cost at Q2 can be represented by the area P3 × Q2.

Figure 14-6 Suppose a Firm Operating in a Competitive Market Has the Has